Beginning with the next FOMC meeting, Common Sense Capitalism will release the Fed statement same day with a) all changes noted and b) important changes highlighted. Below is the FOMC statement from October 30th with changes from September 18th noted.
Information
received since the Federal Open Market Committee met in JulySeptember
generally suggests that economic activity has been expandingcontinued to
expand at a moderate pace. Some indicators Indicators of labor
market conditions have shown some further improvement in recent
months, but the unemployment rate remains elevated. HouseholdAvailable data
suggest that household spending and business fixed investment
advanced, andwhile
the recovery
in the housing sector has been strengthening, but mortgage rates have
risen further and fiscalslowed somewhat in recent months. Fiscal
policy is restraining economic growth. Apart from fluctuations due to changes
in energy prices, inflation has been running below the Committee's longer-run
objective, but longer-term inflation expectations have remained stable.
Consistent
with its statutory mandate, the Committee seeks to foster maximum employment
and price stability. The Committee expects that, with appropriate policy
accommodation, economic growth will pick up from its recent pace and the
unemployment rate will gradually decline toward levels the Committee judges
consistent with its dual mandate. The Committee sees the downside risks to the
outlook for the economy and the labor market as having diminished, on net,
since last fall, but the tightening of financial conditions
observed in recent months, if sustained, could slow the pace of improvement in
the economy and labor market.. The Committee
recognizes that inflation persistently below its 2 percent objective could pose
risks to economic performance, but it anticipates that inflation will move back
toward its objective over the medium term.
Taking
into account the extent of federal fiscal retrenchment over the past year,
the Committee sees the improvement in economic activity and labor market
conditions since it began its asset purchase program a year ago as
consistent with growing underlying strength in the broader economy. However,
the Committee decided to await more evidence that progress will be sustained
before adjusting the pace of its purchases. Accordingly, the Committee decided
to continue purchasing additional agency mortgage-backed securities at a pace
of $40 billion per month and longer-term Treasury securities at a pace of $45
billion per month. The Committee is maintaining its existing policy of
reinvesting principal payments from its holdings of agency debt and agency
mortgage-backed securities in agency mortgage-backed securities and of rolling
over maturing Treasury securities at auction. Taken together, these actions
should maintain downward pressure on longer-term interest rates, support
mortgage markets, and help to make broader financial conditions more
accommodative, which in turn should promote a stronger economic recovery and
help to ensure that inflation, over time, is at the rate most consistent with
the Committee's dual mandate.
The
Committee will closely monitor incoming information on economic and financial
developments in coming months and will continue its purchases of Treasury and
agency mortgage-backed securities, and employ its other policy tools as
appropriate, until the outlook for the labor market has improved substantially
in a context of price stability. In judging when to moderate the pace of asset
purchases, the Committee will, at its coming meetings, assess whether incoming
information continues to support the Committee's expectation of ongoing
improvement in labor market conditions and inflation moving back toward its
longer-run objective. Asset purchases are not on a preset course, and the
Committee's decisions about their pace will remain contingent on the
Committee's economic outlook as well as its assessment of the likely efficacy
and costs of such purchases.
To
support continued progress toward maximum employment and price stability, the
Committee today reaffirmed its view that a highly accommodative stance of
monetary policy will remain appropriate for a considerable time after the asset
purchase program ends and the economic recovery strengthens. In particular, the
Committee decided to keep the target range for the federal funds rate at 0 to
1/4 percent and currently anticipates that this exceptionally low range for the
federal funds rate will be appropriate at least as long as the unemployment
rate remains above 6-1/2 percent, inflation between one and two years ahead is
projected to be no more than a half percentage point above the Committee's 2
percent longer-run goal, and longer-term inflation expectations continue to be
well anchored. In determining how long to maintain a highly accommodative
stance of monetary policy, the Committee will also consider other information,
including additional measures of labor market conditions, indicators of
inflation pressures and inflation expectations, and readings on financial
developments. When the Committee decides to begin to remove policy
accommodation, it will take a balanced approach consistent with its longer-run
goals of maximum employment and inflation of 2 percent.
Voting
for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C.
Dudley, Vice Chairman; James Bullard; Charles L. Evans; Jerome H. Powell; Eric
S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting
against the action was Esther L. George, who was concerned that the continued
high level of monetary accommodation increased the risks of future economic and
financial imbalances and, over time, could cause an increase in long-term
inflation expectations.
